Salary-to-Freelance-Rate Calculator
See the freelance hourly rate you need to charge just to break even on the benefits and taxes a salaried job used to cover for you.
Written by Dorothy Ibrahim, 10+ years in banking & finance
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How we calculate this
This calculator converts a salaried W-2 income into the freelance hourly rate that leaves you no worse off. It grosses your salary up by the value of the benefits you will now buy yourself and the employer-side payroll tax an employee never sees directly, then spreads that total over the hours you realistically expect to bill. The result is a break-even rate, not a target — it is the floor to avoid a quiet pay cut when going independent.
The formulas
- Equivalent revenue
- current salary × (1 + benefits load % ÷ 100 + employer-side FICA rate)Benefits load is your own estimate of what your benefits are worth, as a percent of salary.
- Billable hours per year
- billable hours per week × working weeks per year
- Equivalent freelance rate
- equivalent revenue ÷ billable hours per yearIf billable hours per week or working weeks per year is zero, no rate can be computed.
- Naive comparison rate
- current salary ÷ billable hours per yearShown only to illustrate how much a straight salary-divided-by-hours calculation undercharges.
Worked example
- With the defaults — a $100,000 salary, a 30% benefits load, 25 billable hours a week, and 48 working weeks a year — the equivalent revenue is $100,000 × (1 + 0.30 + 0.0765) = $137,650.
- Billable hours per year are 25 × 48 = 1,200.
- The equivalent freelance rate is $137,650 ÷ 1,200 = $114.71/hour.
- For comparison, naively dividing the $100,000 salary by 1,200 hours gives only $83.33/hour — about $31 an hour short of what actually replaces the salary.
Rates, benchmarks & sources
- Employer-side FICA rate used in the gross-up: 6.2% Social Security + 1.45% Medicare = 7.65% — the share of payroll tax an employer pays on top of an employee’s wages and a freelancer must cover through self-employment tax. — SSA (2025-10-24); IRS; PayrollOrg (2026)
- The 25–40% typical benefits-load range shown as guidance for the benefits input. Actual benefits value varies by employer and role, so it is left as a manual estimate rather than a fixed number. — Rule of thumb (loaded-employee cost multiplier, 1.25–1.4× salary)
Figures current as of 2026-07-02. See our methodology & editorial standards for how constants are versioned and verified.
What this tool doesn’t model
- This is a break-even estimate, not a profit target — it does not add a margin for risk, unpaid downtime, or business growth on top of what the salaried job paid.
- The benefits-load percentage is a manual estimate; it does not look up your actual former benefits package (health plan cost, 401(k) match, PTO payout value).
- Billable hours are self-reported. If you bill fewer hours than entered, the real rate you need to charge is higher than the result shown here.
- Does not account for state income tax, self-employment tax filing mechanics, or business expenses beyond the payroll-tax gross-up — those are handled by other calculators.
Frequently asked questions
How do I convert my salary to a freelance hourly rate?
Do not just divide your salary by 2,080 hours (40 hours × 52 weeks) — that ignores everything your employer paid on top of your paycheck. Add the value of your benefits (typically 25–40% of salary) and the employer’s 7.65% share of Social Security and Medicare, then divide by your realistic billable hours, not hours worked. That is exactly what this calculator does.
Why does the calculator add 7.65% for payroll tax?
As a W-2 employee, your employer quietly pays half of your Social Security and Medicare taxes — 7.65% of your wages — on top of your salary. As a freelancer, you pay both halves yourself through self-employment tax. To be no worse off than the job, your freelance rate has to cover that extra 7.65% your employer used to absorb.
What is the "benefits load" input?
It is the dollar value of the benefits you will now have to buy yourself: health insurance, any retirement match you are giving up, paid time off, sick days, and sometimes life or disability coverage. For many roles this runs 25–40% of base salary, which is why the default here is 30% — but you should adjust it to match what your actual benefits were worth.
Is this the same as my minimum viable freelance rate?
It is your break-even rate — the point where freelancing replaces the total value of the job you left, once hidden costs are counted in. It is deliberately not a profit target, since freelancing carries risk (no guaranteed income, no employer safety net) that a salaried job does not. Most freelancers should charge above this number; use the Freelance Hourly Rate calculator to price in a target take-home and profit cushion on top.
Does this estimate include state taxes or my specific tax situation?
No. This tool only grosses up for the employer-side FICA rate and your entered benefits load — it does not model federal or state income tax, self-employment tax filing, deductions, or credits. It is an estimate of the revenue and rate needed to match a salary’s total value, not a full tax projection.